Getting citizenship for investments: is it good or bad?

Granting citizenship to the people having invested into the Moldovan economy is a form of passively capitalizing on Moldova’s status as an internationally recognized country. At the same time, luring investors through international forums and exhibitions, what does have a right to exist, has turned up being not so efficient and may not be viewed as an exclusive tool to interact with and attract foreign investments.

The Moldovan economy goes on feeding on remittances, as the exports – although up 38% (in January-February 2018) – are not capable though to unleash the overgrowth badly needed for the essential improvement of the living standard. Under these circumstances is or is not the program of granting citizenship for investments the panacea, the element able to miraculously boost the economic growth? Certainly, the answer is ‘no.’ The program can yield contingent effects, as raising the amount of direct foreign investment, as a substantial increase of the financial flows to Moldova and implicitly shaping the investment climate so much talked about for so long.

The Economy Ministry assesses an investment flow of about 1.3 bn euros, a difficult thing to assess as the program is launched for the first time and there is no any market response as to the Moldovan passport yet. Still there is a steady demand for such services on the international market: businesspeople having to migrate because of various reasons ask for a second citizenship. For example, according to a study carried out by CS Global Partners in the UK in 2017, about 89% of the British would like having a second citizenship, and about 34% made the effort to find out how such a one may be acquired.

Most countries do have programs of gaining investor visas or citizenship, what’s more these people are sought for in a tough luring competition. If suich countries as the USA, the UK or Switzerland but display the eligibility conditions, in Moldova’s case, this strategy won’t work because of competitive attractiveness of the Moldovan passport compared to the British or American ones, for instance. Hiring a company specialized in providing such services as Henley&Partners is highly increases the chances of attaining the program goals, given Henley&Partners’ experience in providing a wide range of services for potential applicants, but also its massive database of clients and potential applicants.

The risks implied and the critique targeting such programs of gaining citizenship through investments – hinting it’s an illegal scheme of money laundering – are detached from the real context such programs unfold in. First, these services are provided by companies often related to renowned consulting firms, which would incur reputational risks and would be liable to criminal investigation in many countries. Second, gaining one’s citizenship is a public act, your name becomes public what is not proper for “the strategies” used to launder money, which need interposed persons, shell companies and fake identities for short times. Third, as the campaign is going on at the national scale, were it a money laundering scheme, it would have immediately draw the attention of Moldova’s development partners: the USA, the EU, the IMF and other international financial entities.

And last but not least, all the applicants will be checked up by law-enforcing bodies and the Interpol, as the law provides for.

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The Moldovan fruit farmers’ paradox – anybody can produce but only few chosen can sell

The Republic of Moldova is an agrarian country. The most important agricultural activities in Moldova – the production of walnuts, grapes and some other fruits is, though, squeezed between the political interests and the weak regulations regarding export monopolies establishment and preference of imported products on the internal market. The small Moldovan farms remain outside the big business, being marginalized, misinformed and discriminated when it comes to selling their products inside or outside the Republic of Moldova.

The official data

During a press release of the National Office of Vine and Wine in Moldova, it was communicated that the 2017-2018 season recorded the earliest grapes harvest in the last 40 years. At the same time, the grapes production was 15% higher compared to the average of the last 8 years. According to the National Bureau of Statistics (NBS), in the period January-June 2018, the grape exports from the Republic of Moldova increased by 32.1% compared to the same period of 2017. Moldova exported grapes to Romania – 51.9% of the total export, the Russian Federation – 35% and Belarus – 3.7%.

The National Agency for Food Safety (NAFS) announced a raise in 2018 of the production and export of Moldovan fruits such as apples, plums, peaches, apricots and cherries. According to the provided data, 70.6 thousand tons of apples from 2018 year’s harvest were exported, that being three times more than in the same period of 2017. A significant increase was also recorded in the export of plums – 31 thousand tons of plums have reached the foreign markets. The NAFS talked about the export of fruits to the usual for Moldova international markets, such as the Russian market, and discovering new markets such as Iraq and Bangladesh.

The European Business Association reported a quantity of 10 thousand tons of walnuts, exported by 30 companies entitled to do the exports to France Germany or Austria. There are 29,000 hectares of walnut trees in the Republic of Moldova. In 2017, the walnuts production was 18.7 thousand tons. The main countries where the Moldovan walnuts are exported are the EU countries, Ukraine, Turkey and Russia.

Behind the curtain

Several journalistic investigations performed by few independent media institutions from Moldova, such as Ziarul de Gardă and Jurnal TV, have uncovered the ties between certain family members of the former Prime Minister of Moldova – Pavel Filip, and several companies that have an important role on the walnuts and dried fruits markets. The investigations were launched after the allegations of existing a personal interest of the former Prime Minister in maintaining a monopolistic situation on the walnuts market. While checking the reason of a dramatic decrease of walnuts selling price on the market, the journalists have found a scheme of collecting and centralizing of walnut production by few collector firms that transported them afterwards to “Monicol” SRL – a company owned by father of the Filip’s daughter-in-law. The company has a market share of about 20% and the government’s protection in their activity. The allegations were denied by Pavel Filip, but no financial information regarding the company’s activity was made public.

Svetlana Lungu, the Head of Plant Protection and Health Directorate of NAFS, explained that the process of obtaining the necessary papers for exporting walnuts is not so hard. “In the EU, the requirements are minimal. Namely, it is necessary to obtain the phytosanitary certificate for the export of products of plant origin. The registration of the exporter and the producer is required by NAFS, as well as owning or renting a storage space by the exporter and signing a contract with the producer,” declared Lungu. Therefore, as long as the process is standardized, why the Moldovan walnuts are officially exported by only 30 companies and a monopoly is established on the market unofficially? Maybe because there are some political and personal interests of ‘filtering’ the companies authorized to export.

Walnuts exporting is a profitable business in Moldova. According to TV8, one kilogram of Moldovan walnuts costs 23.94 euro on the Belgian store shelves (about 462 lei). In Moldova, one kilogram of walnuts could reach 150/200 lei on the market, but from producers it is bought for 60/80 lei per kilogram.

The situation for the grapes and fruits producers is not much better. Few weeks ago, a campaign was initiated by a grapes’ producer, Diana Crudu, that advised people not to buy flowers for the International Women’s Day, but a box of grapes or apples.

“There are over 7 thousand tons of grapes in the Moldovan warehouses. If they are not sold in the next two or three weeks, these grapes will have to be thrown away. The wine factories do not have the capacity to process and storage such a large quantity of grapes. This is the most dramatic situation faced by table grape manufacturers in the last 15 years,” said Diana in an interview for RFE/RL.

The producers are forced to sell the grapes on the local market for 3 to 6 lei per kilogram. At the same time, consumers are offered the possibility to buy imported grapes for 80 lei per kilogram in the Moldovan supermarkets.

The Ministry of Agriculture representative, Iurie Mudrea, declared that no compensation for unsold products can be provided. “The business always involves risk. Calculate, my dear, solve the problem, think about it at the beginning of year, put some efforts. Even Russia no longer accepts low quality, we need high quality for all products. Here we have to start: big volumes, high level of quality and a lot of effort,” declared Mudrea for TV8.

The Ministry of Agriculture claimed that apples could be purchased directly from producers and distributed free of charge in schools. At the same time, the “qualitative and nicely packed” apples could be sold in the country’s retail shops, and the fruit quality monitoring infrastructure could be developed. A lot of things could be done. But will they?

The real solution came from Moldovan people. An event organized by the Klumea Association encouraged Moldovan people to become solidary with the grapes’ producers and come on Sunday, February 24th, at a bazaar in the city centre of Chisinau to buy a box of domestic grapes, with only 5 lei per kilogram. The initiative has a suggestive name: ‘Take Moldova home’.

Moldova will participate in “Expo Dubai 2020”. The pavilion of our country, divided into four areas: “Discover, Taste, Craft and Invest”

The Republic of Moldova will participate in the World Expo Dubai 2020 Exhibition. According to the concept, our country’s pavilion will be divided into four key areas: “Discover, Taste, Craft and Invest”.

The Ministry of Economy and Infrastructure announces that visitors will be able to explore the history of our legendary wine, learn about national, cultural, historical values.

At the same time, “Expo Dubai 2020” represents an opportunity to intensify trade, economic, scientific and technological exchanges with other states and companies.

It is an event where new outlets for domestic products will be identified. At the same time, visitors will know about investment projects that might be of interest to business people around the world.

According to organizers’ estimates, “Expo Dubai 2020” will be visited by about 25 million people around the world.

“The International Exhibition Center” Moldexpo “, designated as responsible for the organization of our country’s participation in this event, must make every effort and respect the established terms. We must make ourselves seen and heard as a state with investment, tourism and cultural potential, “the official said.

The World Expo (World Expo) is the third largest event in the world with an economic, social and cultural impact, and is held every five years, with a duration of 6 months. The Republic of Moldova has previously participated in such events, including in Hanover, Germany (2005), Shanghai, the People’s Republic of China (2010) and Milan, Italy (2015).

The energy and investment sector of Moldova, discussed in the the United States

On his second day in the United States of America, State Secretary for Economic Affairs, Vitalie Iurcu, discussed the Moldovan-American cooperation in the commercial-economic field, with an emphasis on energy.

During the meeting with the Republican congressman in the state of Texas, Jodey Arrington, the two exchanged views on developments in the Moldovan energy sector. At the same time, the State Secretary of the Ministry of Economy and Infrastructure received support from US officials, reiterating interest in the energy security projects of our country. Moreover, during the meeting, invitations were exchanged for subsequent visits to Chisinau and Washington DC.

State Secretary and President of the Moldovan-American Business Council, Steve Nicandros, welcomed the Moldovan-American ascendant dynamics, especially the commercial-economic cooperation and the intensification of the B2B dialogue. The interlocutors agreed to maintain working contacts in order to identify new areas of cooperation on the economic branch and to promote bilateral investments in the key sectors of the national economy, including the energy sector.

The officials further attended the meeting with representatives of the business community in Houston, Texas. Vitalie Iurcu presented the advantageous investment field of the Republic of Moldova and urged investors in Houston to explore ways to collaborate with our country.

Reminder: Moldova participated in the first ministerial meeting of the Partnership for Transatlantic Energy Cooperation and the Investment Forum in Houston, United States of America.